Future Retail-Amazon battle| This isn’t the first time Amazon is facing allegations of misrepresenting facts

The allegations of misrepresentation and concealment made by the independent directors of Future Retail against Amazon aren’t the first for the US e-commerce company. In its long history of run-ins with the law, Amazon has even been accused of lying to the US Congress.

On Sunday, the independent directors of Future Retail wrote to the Competition Commission of India urging to revoke its nod for the Amazon-Future Coupons deal.

In a fresh issue for Amazon in its association with the Future Group, Future Retail’s independent directors wrote to the Competition Commission of India (CCI) against the November 2019 Amazon-Future Coupons (FCPL) deal. Their letter claimed that Amazon had concealed and misrepresented facts over its rights over Future Retail Ltd.

In 2019, in a two-step process that skirted Indian regulations Amazon got veto rights over listed Future Retail Ltd.

Second, Amazon invested Rs 1,430 crore for a 49 percent stake in Future Coupons (which owned a 9.82 percent stake in Future Retail), giving itself effective veto power over Future Coupons.

In effect, Amazon has significant strategic rights over Future Retail and has usurped the rights of shareholders of the company without holding any shares, the letter said.

However, at the time of getting the competition regulator’s nod for the Future Coupons deal, Amazon misrepresented that its rights over Future Retail were “only investment protection rights” while seeking CCI’s nod, added the letter to the regulator.

What’s more, Amazon told a different story to courts and tribunals, the letter alleged. In legal fora, Amazon had represented that “The purpose of the transaction / combination was only to obtain the special and material strategic rights over FRL’s [Future Retail] business and retail assets,” the letter said.

In effect, Amazon had used this argument to block Future Retail’s efforts to sell its assets via a slump sale to Reliance.

“As we’ve said all along, Amazon and its executives have engaged with the Committee with candor, accuracy, and truthfulness, and we have operated in good faith in participating in the Committee’s investigation and hearings. The conclusions reached in the news reports are inaccurate and unfounded, and we appreciate the Committee’s invitation to correct the record," said an Amazon spokesperson.

This is not the first instance where Amazon has been accused of suppressing facts. In October this year, Reuters had published an investigative story that exposed how the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India.

Following this, members of the US House Judiciary committee wrote to Amazon CEO Andy Jassy and accused the company's top executives, including founder Jeff Bezos, of either misleading Congress or possibly lying to it about Amazon's business practices, reported Reuters. Bezos, in particular had sown to the Judiciary Committee’s antitrust subcommittee that Amazon prohibits its employees from using data on individual sellers to benefit its own private-label product lines. Amazon has denied these allegations.

In an earlier February 2021 report, Reuters said from its examination of internal Amazon documents that the company had a secret strategy to dodge India’s regulators.

These allegations of using customer data follows those by small traders that Amazon had given preferential treatment to certain sellers on its e-commerce marketplace.

In January 2020, CCI had ordered its director general to investigate Amazon (and Walmart-owned Flipkart) for anticompetitive practices. Amazon fought this all the way to the Supreme Court and the matter was settle only in August 2021, when the apex court ruled in favour on the CCI probe to continue.

Even in the Future Coupons deal, the company has violated foreign direct investment (FDI) rules which prohibit foreign firms from holding stakes in multi-brand retail outlets without government nod.

The Enforcement Directorate (ED), the prosecuting authority under the Foreign Exchange Management Act (FEMA), is investigating Amazon for possible violation of FDI rules in India.

(Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)